A broad decline across European stock bourses accelerated and New York’s S&P 500 opened lower after Donald Trump criticised China’s handling of key trade talks between the two countries.
The Wall Street index fell 0.7 per cent in early Tuesday exchanges, having finished the previous session at a fresh record high. German stocks, which had been down much of the session, fell further after the US president said China has not “come through” in trade negotiations.
Germany’s benchmark Dax 30 index was recently down over 2 per cent and on track for its heaviest one-day fall since February. Germany’s economy, with its sprawling factory sector, is particularly sensitive to trade fluctuations, meaning its market often swings when there are
changes in sentiment.
The continent-wide Stoxx 600 was down 1.4 per cent, with Spanish and Italian stock markets down around 2 per cent. Only the UK’s FTSE was relatively unscathed, down just 0.3 per cent,
with the main London stock index sheltered by the pound’s sharp decline to two-year lows.
Mr Trump’s comments come as a new round of negotiations kicked off in Shanghai. Expectations for a major breakthrough were subdued, but some analysts hoped negotiators would at least extend a symbolic olive branch.
“Well I guess the negotiations aren’t starting out that well between China and the US,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group, referencing Mr Trump’s tweets.
Richard Hunter, head of markets at Interactive Investor, added: “The latest Trump tweet tirade on China
has taken the gloss off [forecast] Federal Reserve rate cuts and better than expected US second-quarter earnings — for the time being at least.” Banking and financial stocks were under the most pressure.
The Stoxx index tracking the sector in Europe was down 2.4 per cent, leaving it faced with
one of its biggest single-session losses since December, when a bout of volatility on global markets shook stocks from their last record-breaking run.
